EDA to Launch New European Procurement Code on July 1, 2006
In our October 2005 article “EU Defense Ministers Take Initial Steps to Open Up Arms Competition,” DID pointed to the EU’s European Defense Agency, its radical push for greater integration in Europe’s defense industry, and its less radical approach to greater cooperation on transnational European defense procurement programs. DID covered the issues of stricter European Commission enforcement, narrowed exemptions from open European defense contracts under EU Article 296 ‘national security interests’ clause, the local political interests that will make this a difficult row to hoe, the offsetting role lower defense spending is playing in fostering integration, and the underlying rivalry with NATO that cannot entirely be hidden.
A recent EDA release notes that the new European defence equipment market will be launched on 1 July, with the participation of all but three of the 25 EU Member States…
The market will operate on the basis of the November 2005 Code of Conduct on Defence Procurement, whereby defence contracts worth more than EUR 1 million (currently about $1.2 million dollars) would be advertised on a single electronic portal so companies across Europe could tender for them. It is also intended to make the criteria for selecting bidders and awarding contracts more transparent and objective, in order to narrow the possibilities for national industry preferences by other means.
The EDA Code of Best Practice in the Supply Chain was just approved by most of the EU Ministers of Defense on May 15, 2006. It is intended to extend the benefits of greater competition to smaller companies who could act as sub-contractors.
The 22 subscribing Member States are: Austria, Belgium, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Sweden, and United Kingdom.
Code of Conduct opt-outs include Hungary and Spain, as well as Denmark which has a general opt-out on European Security and Defence Policy and is not part of the EDA.
The Steering Board is the EDA’s principal decision-making body, made up of Defence Ministers from 24 participating Member States (all EU members except Denmark) and a member of the European Commission.
The Code of Conduct commits subscribing Member States to maximizing fair and equal opportunities for all suppliers based in other subscribing Member States by publicising procurement opportunities through a new Electronic Bulletin Board, which will be operated by the Agency. The EDA will also run a reporting and monitoring system, collecting data for contracts awarded under the Code and seeking formal explanations where Member States decide not to apply it, for example by using the EU’s Article 296 national security exemption. See EDA release.
See also DID’s Nove,nber 2005 entry “Nick Whitney on the EDA and the USA” for the EDA’s public position re: oits initiatives and Euro-American defense industry relations.